Key Considerations for Lenders Foreclosing the Same Property Multiple Times in Florida

When a borrower defaults on a mortgage, lenders will likely execute their right to foreclose on the property by filing a lawsuit. However, lenders are not always the successful party in the foreclosure and, to the disappointment of the lender, the lawsuit may be dismissed. Luckily, lenders can take a big sigh of relief because they may live to fight another day. Thanks to two decisions from the Florida Supreme Court, Singleton v. Greymar Associates, 882 So. 2d 1004 (Fla. 2004) and Bartram v. U.S. Bank National Ass’n, 211 So. 3d 1009 (Fla. 2016), lenders may be able to file a foreclosure lawsuit on the same property more than once.

Singleton v. Greymar Associates

 In this case, the mortgagee brought two foreclosure lawsuits against the mortgagor. The first foreclosure lawsuit was dismissed with prejudice by the trial court after the mortgagee failed to appear at a case management conference. Following the dismissal, the mortgagee filed a second foreclosure lawsuit based on a separate default. The trial court entered a summary judgment of foreclosure for the mortgagee, holding that the prior dismissal did not bar relief in the second foreclosure lawsuit. As a result, the mortgagor appealed to the Fourth District Court of Appeal. Singleton, 882 So. 2d at 1005.

On appeal, the Fourth District affirmed the trial court’s decision and held that even if the earlier foreclosure lawsuit was dismissed with prejudice, the application of res judicata does not bar subsequent foreclosure lawsuits that are based on new and different defaults. Following the Fourth District’s decision, the mortgagor petitioned the Florida Supreme Court for jurisdiction based on conflicting case law. Id.

Luckily for lenders, the Florida Supreme Court agreed with the Fourth District and held that “when a second and separate action for foreclosure is sought for a default that involves a separate period of default from the one alleged in the first action, the case is not necessarily barred by res judicata.” Id. at 1006-07. Based on this, lenders are not barred from foreclosing on the same property more than once, provided the foreclosure is based on a new and separate default. However, if the borrower returns to making timely loan payments after the foreclosure lawsuit is dismissed, the lender will not have a new cause of action for foreclosure.

Bartram v. U.S. Bank National Ass’n

In 2016, over a decade later, the holding in Singleton was confirmed and expanded by the Florida Supreme Court in Bartram. In this case, Mr. Bartram (the “borrower”) obtained a $650,000 loan secured by a mortgage on his property in St. Johns County. The mortgage was a standard residential form mortgage and contained an optional acceleration clause, which provided that the failure to cure a default may result in acceleration and foreclosure of the property. In January 2006, the borrower stopped making payments on his mortgage. As a result, in May 2006, the bank filed a foreclosure lawsuit. However, about five years later, the case was involuntarily dismissed with prejudice because the bank failed to appear at a case management conference. Bartram, 211 So. 3d at 1013-14.

Approximately one year later, the borrower filed a crossclaim against the bank, seeking a declaratory judgment to cancel the mortgage and to quiet title to the property. The borrower argued that the five-year statute of limitations, provided in Section 9.11(2)(c) of the Florida Statutes, barred the bank from bringing another foreclosure lawsuit. The trial court agreed with the borrower, dismissed the second foreclosure lawsuit, and cancelled the note and mortgage. After the bank’s motion for rehearing was denied, the bank appealed to the Fifth District Court of Appeal. Id at 1015.

On appeal, the bank relied on the Florida Supreme Court’s decision in Singleton and argued that it could foreclose on the property  for a second time based on the borrower’s defaults that occurred after the first foreclosure lawsuit was dismissed. The borrower argued that subsequent foreclosure actions were barred by the five-year statute of limitations because the triggering event for statute of limitations purposes was the bank’s acceleration, which the bank didn’t revoke. The Fifth District agreed with the bank and held that, based on Singleton, “a default occurring after a failed foreclosure attempt creates a new cause of action for statute of limitations purposes, even where acceleration had been triggered and the first case was dismissed on its merits.” Bartram, 140 So. 3d 1007, 1014 (Fla. 5th DCA 2014). Accordingly, the Fifth District reversed the trial court’s judgment, remanded the case to the trial court, and certified the following question to the Florida Supreme Court: Does acceleration of payments due under a residential note and mortgage with a reinstatement provision in the foreclosure action that was dismissed pursuant to Rule 1.420(B), Florida Rules of Civil Procedure, trigger application of the statute of limitations to prevent a subsequent foreclosure action by the mortgagee based on payment defaults occurring subsequent to dismissal of the first foreclosure suit? Bartram, 211 So. 3d at 1012, 1015.

The Florida Supreme Court began its analysis of the certified question by reviewing its decision in Singleton, which held that res judicata does not bar mortgagees from bringing a foreclosure lawsuit based on new defaults. Although the Singleton decision did not discuss the five-year statute of limitations, the court held that the reasoning was applicable. The court held that “with each subsequent default, the statute of limitations runs from the date of each new default providing the mortgagee the right, but not the obligation, to accelerate all sums then due under the note and mortgage.” Id at 1018-19.

The court also clarified that mortgagees can bring another mortgage foreclosure lawsuit based on a subsequent default accruing after the dismissal of an earlier foreclosure lawsuit, regardless of whether that dismissal was with or without prejudice. The court stated that a dismissal returns the parties back to “the same contractual relationship with the same continuing obligations.” Id at 1020, 1022.

In conclusion, the court held that when the first foreclosure lawsuit was involuntarily dismissed, the bank’s acceleration was revoked. However, the bank had the right to file a subsequent foreclosure lawsuit, so long as it was based on a subsequent default, and the statute of limitations had not run on that particular default.

Key Takeaways for Lenders

The takeaway from the Singleton and Bartram decisions is that if a prior foreclosure lawsuit is involuntary dismissed, with or without prejudice, lenders are able to file a subsequent foreclosure lawsuit, provided:

• The subsequent foreclosure is based on a separate default that occurred after the dismissal of the first foreclosure lawsuit; and
• The foreclosure lawsuit is brought within five years from the new default.

Just as a lender has a right to foreclose on subsequent defaults after a previous dismissal, so too does the borrower have the ability to make loan payments going forward in order to avoid foreclosure. While it is true that in borrowers simply can’t receive free houses based on technicalities or simple mistakes from lenders, it does not mean that lenders should shirk their obligations to pursue defaulted loans in a timely and competent manner.